Scam Alert: Used Cars

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If you’re buying a used vehicle, heed the warning, “Buyer beware!” You may be buying a vehicle that was on its way to the salvage yard or a stolen car that you won’t be able to register. To help prevent these problems, the US Department of Justice offers an electronic database called the National Motor Vehicle Title Information System (NMVTIS).

NMVTIS is designed to:

Protect states and consumers from fraud

Protect consumers from unsafe vehicles

Keep stolen vehicles out of interstate commerce

Reduce the use of stolen cars for illicit purposes

Help law enforcement agencies reduce vehicle-related crimes

NMVTIS gathers its information from several sources, including state motor vehicle departments, insurance companies and salvage yards. By law, NMVTIS information is available for a small fee to potential buyers. This includes businesses that purchase used automobiles and commercial buyers, such as car dealers and lenders who finance car purchases. NMVTIS has information on many vehicle types, including automobiles, buses, trucks, motorcycles, recreational vehicles, motor homes and tractors.

Vehicle Brand History

An important piece of information provided by NMVTIS is the vehicle’s brand history. The brand is the descriptive label each state places on a vehicle to identify its current or previous condition. For example, a vehicle that has incurred significant damage is often branded as a “junk” or “salvage” vehicle.

Once a state motor vehicle department brands a vehicle, that brand becomes a permanent part of the vehicle’s NMVTIS record. Knowing a vehicle’s brand helps buyers avoid scams where vehicles marked for the salvage yard are cleaned up and resold.

A scam artist can easily “wash” – i.e., remove – a brand from a vehicle’s title. The vehicle is retitled in a state that doesn’t check with other states to determine whether it has existing brands not shown on the vehicle’s paper title. Then, the vehicle is sold without disclosing its brand history and condition.

After Hurricane Katrina, many cars flooded by salt water were taken from Louisiana to states that don’t “brand” flood vehicles. The cars were cleaned up and sold to unsuspecting consumers.

NMVTIS is designed to prevent a vehicle’s history from being concealed. The system allows a state to check a vehicle’s brand history from all other states before it issues a new vehicle title.

Cloned Vehicles

NMVTIS can detect a “cloned” vehicle. A cloned vehicle is a stolen vehicle that has had its vehicle identification number (VIN) removed and replaced with the VIN of a legally owned vehicle of the same make, model and year.

With a valid VIN number, a stolen vehicle often goes undetected by state motor vehicle departments, law enforcement and unsuspecting consumers. The cloned vehicle might be sold to a consumer or used to carry out a crime.

Vehicle cloning is a growing problem. According to the National Insurance Crime Bureau, estimated profits from vehicle cloning in the United States exceed $12 million a year, and each cloned vehicle nets an average of $30,000.

By checking NMVTIS, state motor vehicle departments can identify suspected stolen vehicles before issuing a new title. The system reveals whether the same VIN is issued to another vehicle. Law enforcement can be notified immediately.

State Implementation

States using NMVTIS have time and cost savings in their motor vehicle departments, decreased motor vehicle thefts and improved stolen vehicle recovery. Arizona, for example, has experienced a 99% recovery rate on vehicles identified as stolen and a decrease in consumer lawsuits involving vehicles with concealed brands.

States use different standards and terms in branding vehicles. For example, the “salvage” brand definition may be based on dollar value. A car could be branded as salvage in one state, but not another due to such differences.

Categories of brand designations aren’t uniform among the states. Louisiana, for example, had a brand designation of “flood” vehicle, and many flood-damaged vehicles were taken to and retitled in states without that brand. NMVTIS shows a vehicle’s reported brand designations from all states; relocation won’t “wash” its brand history.

The goal of NMVTIS is that all states use it to prevent consumer fraud and vehicle-related crimes. Presently, more than half of the states report data to NMVTIS. The remaining states must begin reporting by January 1, 2010. Insurance carriers and junk and salvage yards must begin reporting by March 31, 2009.

Check NMVTIS before Purchasing a Used Vehicle

Use NMVTIS data as you plan your vehicle purchase. An NMVTIS vehicle history report includes:

Information from the vehicle’s current title, including its brand history

The latest reported odometer reading

An insurance company’s designation that the vehicle is a “salvage” vehicle or was determined to be a total loss

Any reports that the vehicle has been transferred or sold to a junkyard, salvage yard or auto recycler

You can check out the VIN of the vehicle you are considering purchasing on the NMVTIS Web site. Currently, the cost of an NMVTIS vehicle history report ranges from approximately $2 to $4 per report. The report also includes a link to access the full vehicle title record from the state in which the vehicle is currently titled.

Questions for Your Attorney

Do I have a legal claim against a used car dealer if it had negative branding information from an NMVTIS report on the car I bought but didn’t disclose it to me?

Do NMVTIS reports include information about lemon law claims?

Will an NMVTIS report include information about a car if it was a dealer’s demo and it suffered damage before a consumer bought it?

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